Adding their first employee was a turning point for Cody and Jestin Gieck. The architects, who are also cousins and business partners, knew they wanted to grow their Lakewood, Colorado-based startup, G Squared Design, into a successful small business. They had the design and architecture part down, but running the financial side of the business was a different story. “Figuring out money and making sure we could make the bills work was challenging,” Jestin says.
That’s when they turned to Northwestern Mutual Wealth Management Advisor Mike Jones, who works with business owners across the country. “They were admitted financial novices,” recalls Jones. “Like many entrepreneurs, they wanted to make smart and intelligent choices, looking to their future.” So he led them through four key steps.
Personal financial planning becomes more important when you’re a small business owner, and in many cases, it’s wise to tie your personal financial plan to your business financial plan.
SECURING THE BUSINESS
What would happen to the cousins’ business or their families if something unexpected happened to them? A key consideration for your business should be planning for such a possibility. This can give peace of mind to your family, your customers, your employees and, most importantly, you.
In the cousins’ case, they started with term life insurance policies to protect their families. Next was a buy-sell agreement, which protected the business in the event that either of the founders were to die prematurely. The buy-sell agreement provides security for their families by giving the surviving partner the ability to buy out ownership of the other half of the business. Finally, Jones advised that the founders begin to set aside some cash to cover potential emergencies or cash flow needs.
CONNECTING THE BUSINESS PLAN TO THEIR PERSONAL FINANCIAL PLAN
Personal financial planning becomes more important when you’re a small business owner, and in many cases, it’s wise to tie your personal financial plan to your business financial plan. As the business grows and income increases, tax strategies become more crucial and revenue can be saved and invested to help the company achieve long-term goals. “We essentially integrated their business success with the success of their personal finances,” Jones says. The experience has been eye-opening, says Cody. “Helping us organize our finances has been a real education process,” he says. “Mike would show us ways to help keep business money growing and personal money growing.”
STARTING AN OPPORTUNITY FUND
When the next big idea comes along, entrepreneurs should be financially prepared to jump on it, Jones says. “When small-business owners set money aside in things like mutual funds, money market accounts or investments, it can grow and be available to seize on an opportunity,” he says.
This is crucial, he says, because an entrepreneur’s vision can change over time. “We worked really hard to figure out what Cody and Jestin’s long-term vision was,” Jones says. “But that vision has evolved, and it continues to do so.” Setting aside money each month for an opportunity fund gave the cousins the confidence that they could act quickly when the time came.
ATTRACTING AND RETAINING EMPLOYEES
“Developing strategies to retain top talent is like putting glue in the seat,” Jones says. For G Squared Design, the “glue” is health and dental insurance and a Simple IRA that may eventually morph into a profit-sharing 401(k), according to Jones. “Our goal is to grow our small business and help people along the way,” says Cody. “After all the learning and planning, we now feel confident we’re on the right track to make that happen.”
The cousins are already on their way to reaching that goal. The company has taken on a $30 million project, and he small office is nearing capacity, with eight employees. (The cousins have a goal of expanding to as many as 20.) They’re working with Jones on a game plan to buy and build out a new facility, which they would lease back to their business.
Jones enjoys watching the cousins’ success. “They work really hard but have fun doing it,” he says. “They are an American Dream story. I have no doubt they’ll continue to be successful.”